EU 🇪🇺 regulation is pushing Tether (USDT) out of Europe and making Circle (USDC) weaker Europe’s crypto regulation disaster is unfolding in real-time. MiCA is forcing stablecoins into broken banking models, and biggest players are feeling the impact. Tether is leaving Europe. Circle’s USDC is getting weaker. MiCA’s plan to “protect financial system” is not working. Europe’s stablecoin future is dead👇 1. MiCA’s 60% Bank Deposit Rule Is a Trap MiCA forces stablecoin issuers to hold 60% of reserves in European banks. Instead of keeping funds in safe US treasuries, stablecoin issuers must move billions into weak EU banks. EU banks: - Offer lower interest rates than US Treasuries. - Are less liquid – meaning withdrawals could get delayed. - Aren’t safe – EU banks have far lower Tier 1 capital reserves than stablecoins like Tether. Silicon Valley Bank collapsed in 2023, and USDC lost its peg because of trapped reserves. MiCA wants stablecoins to store money in banks that could face same risks? Insanity. 2. Tether Is Leaving Europe – USDC Is Getting Weaker Tether is not complying with MiCA. USDT is being delisted from European exchanges because MiCA is destroying stablecoin profitability. Circle tried to comply – but it came at a huge cost. USDC had to split into two versions: 1. USDC (US) – Backed by safe, high-yield U.S. Treasuries. 2. USDC (EU) – Backed by risky European bank deposits under MiCA. This is not the same USDC anymore. For European users, MiCA made USDC a weaker stablecoin with higher risks. USDC under MiCA can only process €200M in transactions per day before it hits regulatory limits. That’s not even 1% of stablecoin daily volume globally. How is this supposed to be the “future of digital finance”? 3. MiCA Is Protecting Banks – Not Users MiCA isn’t about protecting stablecoin users. It’s about forcing money back into banking system to protect EU banks from being disrupted. Instead of letting stablecoins hold reserves in safest asset in world, MiCA is forcing them into a fragile banking system. Stablecoin reserves are safer and more liquid than most European banks. But MiCA’s goal is control – not financial stability. Result? Europe Is Losing Crypto Liquidity Tether is out. USDC is weaker. Liquidity is leaving Europe. Traders are moving to the US, Asia, and UAE. Europe is self-sabotaging its crypto future. Middle East is embracing innovation. US under Trump is pushing for Bitcoin reserves. And Europe? It’s regulating itself into irrelevance. What Happens Next? Will Circle fight back against MiCA’s bad rules? Will USDC users accept the higher risk of bank deposits? Will the EU realize it’s killing its own crypto market? I’ve been in crypto for 10+ years. I built a crypto exchange. I built a market-making firm. I know this market inside out. MiCA isn’t making stablecoins safer. It’s making them riskier. Subscribe to my newsletter: antongolub.substack.com
Anton Golub if MiCA has ruined the EU crypto market and stablecoins (which you have previously said EU is a non event in stablecoins), why so much commentary on it? But I think it’s dis generous to say EU banks are riskier than US, the derivatives market links everyone in a web of promises. Its not like JPM have been hovering up distressed US banks as required by the respective US regulators to ensure stability. Any way enjoy the conference in HK
MiCA is far from perfect. Tether’s partnership approach is the most reliable approach.
Agree to disagree. Whilst regulation is „work“, #usdt simply did choose not to implement the necessary regulation. Thats life! 🤷♂️ Anton Golub
Tether Is Leaving Europe.. but they are buying Juventus :-)
The clue is in the title - European UNION. It is a Union to promote its own interest not anyone else's. As you say 'goal is control'
MiCA is making stablecoins less safe. Stablecoins work because they are fast, stable, and not tied to weak banks. Forcing them into risky banks defeats the whole purpose.
I agree: MiCAR in this form could be a huge limitation for the development of the crypto industry in the EU. But I disagree on a point: Tether is not leaving Europe, USDT is leaving Europe. Which is concerning for the future of stablecoins inside the EU, but different. Paolo Ardoino bought Juventus to enhance Tether brand in Europe, since it was unknown from the most, even in Italy, his home country. Now that he has all the spotlights, I expect a bold move from Tether inside the EU market.
Well, at least MiCA safeguards from the "rug pull" meme-coin disasters we have seen in the USA ($TRUMP etc) 😉
Well said Anton Golub ! Bravo.
Solution Architect Lead EMEA at Kaleido
1wAnton Golub agree on the directional thought, but: US T-Bills yield is higher than European ones because it has more sovereign risk: - US: $38 Tr (120% debt-to-GDP). - Europe: €13 Tr (80% debt-to-GDP). However, its position as global currency and the European fragmented debt nature makes them more unattractive. And USDC (EUR) is not backed by risky European bank deposits under MiCA: those deposits are custodied in banking safeguard accounts - at least, 60% -, which can be deposited in the ECB risk-free interest rate (2.75%), whereas the other ones are reinvested in HQLA. Probably, the rationale behind EU banning 100% funds reinvestment in T-Bills is: - Avoiding banking desintermediation. - Lack of European deep and liquid public debt market, as opposed to the US one. But agree, Europe has a huge problem with competitiveness, and a very small market to leverage EUR-based stablecoins against global dollar-based ones.